Accounting prof featured speaker at SUNY Buffalo

October 28, 2013
Mark Nigrini

For Mark Nigrini’s accounting students, learning about Benford’s Law is just par for the course. For students attending SUNY at Buffalo, the introduction to Benford was a special talk Dr. Nigrini presented on Oct. 3 as part of the Helen and Oscar Sufrin Lectureship in Accounting, which brings distinguished speakers to that university.

A professor at the West Virginia University College of Business and Economics, Nigrini teaches auditing and forensic accounting. His research includes application of forensic analytics to topics such as the detection of Ponzi schemes and the detection of employee fraud. Along with several of his accounting colleagues Nigrini does research into fraud and the legal framework of fraud convictions.

Nigrini is the author of Forensic Analytics, which describes tests to detect fraud, errors, estimates and biases in financial data. He is also the author of Benford's Law, which gives the expected patterns of the digits in tabulated data. This phenomenon has been used by auditors to detect anomalies that could indicate fraud. In short, in a set of data, numbers beginning with the number one are statistically more prevalent than those beginning with higher digits such as seven, eight or nine.

“If a person is inventing numbers, then we would suspect that they would violate Benford’s Law,” he said. “It’s what we call a ‘red flag.’”

In 1881 American astronomer Simon Newcomb first recognized the phenomenon. Then it was rediscovered in 1938 by American scientist Frank Benford, who tested it on data from 20 different domains. His data set included the surface areas of 335 rivers, U.S. population numbers, 104 physical constants, 1,800 molecular weights, 5,000 entries from a mathematical handbook, 308 numbers contained in an issue of Reader's Digest, the street addresses of the first 342 persons listed in American Men of Science and 418 death rates. The total number of records used in the study was 20,229.

In all of this data, Benford saw the same pattern, lower digits occurring far more frequently than higher digits, said Nigrini, who wrote his Ph.D. dissertation on the phenomenon. In fact, he has on his office wall Benford’s engineering diploma from the University of Michigan and a large photo of the man, both donated to Nigrini by Benford’s family.

Approximately 200 people attended the lecture on the SUNY Buffalo campus. “For the audience in Buffalo, this was part of the distinguished lecture series, which in 2011 included Sherron Watkins, the former Enron Corp. vice president. She is the whistleblower who alerted then-CEO Ken Lay in 2001 to accounting irregularities within the company, warning him that Enron ‘might implode in a wave of accounting scandals,’” he commented.

Shelly Stump is a graduate student in the Master of Professional Accountancy program from Coal City, W.Va. She said Nigrini’s class has certainly held her attention. “Dr. Nigrini is extremely passionate about the research he has conducted and often makes dry material seem interesting,” she said. “He does a stellar job at engaging his students. He is a wonderful professor, as well as a person, both inside and outside of the classroom.”

Nigrini’s academic papers have been published in Auditing: A Journal of Practice and Theory, The Journal of the American Taxation Association, The Journal of Forensic Accounting, The Journal of Emerging Technologies in Accounting, and others.

Nigrini joined B&E this past August. “I came to the College of Business and Economics because faculty here take forensic accounting seriously,” he said. “In fact the entire area of forensic and investigative science is very prominent and important at WVU. I’m honored to be here.”

He earned a Ph.D. from the University of Cincinnati, an MBA from the University of Stellenbosch in South Africa and an undergraduate degree at the University of Cape Town.

Previously, he was an associate professor at the College of New Jersey’s School of Business.